Week 2 Assignment – Supply and Demand Simulation
Week 2 Individual Assignment – Supply and Demand Simulation This week’s assignment examined the effects of supply and demand on the pricing and availability of real world goods. In this instance, the simulation looked at pricing and availability of two bedroom apartments in the fictional city of Atlantis. The simulation takes a look at several different situations, outside market factors and governmental influence. By going through the simulation and adjusting the pricing levels of the apartments and the number that are being made available to be rented, the simulation shows the effects of things like new employers moving into the area, rent control laws being put into effect and the change in trend from apartments to homeownership and back again. Microeconomics Versus Macroeconomics
In this simulation, concepts from the study of both microeconomics and macroeconomics are observed. Macroeconomics covers factors that affect the whole economy of an area, not just one company. Events such as scenario four’s introduction of Lintech into the area changes the economy of the entire city, not just GoodLife Inc’s financial situation. GoodLife saw an increase in demands for their apartments because of the influx of workers in the area. However, as evidenced in scenario seven, the increase in price due to the increase in demand because of the influx of businesses into Atlantis made GoodLife’s apartments unaffordable by many people and the city council stepped in, placing a cap on how high rent could go. Scenarios one and three exhibit microeconomic concepts far better, with the prices and the balancing act of revenue coming in from rentals versus the cost of maintaining those apartments being decided by and affecting only the business of GoodLife itself, with no outside influence from other companies or governmental influence.
Supply and Demand Curves
Scenarios 1 and 2 are excellent examples of the supply...
References: Colander, D. C. (2010).Economics (8th ed.). New York, NY: McGraw-Hill.
Applying Supply and Demand Concepts. University of Phoenix Retrieved Dec 17th, 2012 from https://ecampus.phoenix.edu/secure/aapd/vendors/tata/UBAMsims/economics1/economics1_supply_demand_simulation.html
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